Jack Daniel’s Spikes Parent Brown-Foreman Third Quarter Profits

Jack Daniel

Jack Daniel’s lubricated parent company Brown-Foreman third quarter profits with a 12 percent bump, most of which is being attributed to the iconic whiskey…. just don’t call it bourbon. Tennesseans prefer to call their native corn liquor by its family name: sour mash.  It is right on the label, but the word “Bourbon” is not. The 12 percent bump generated strong interest on Wall Street, where the Brown-Foreman’s profit report beat analyst predictions, resulting in a 4 percent spike in the company’s share price on the exchange, where Brown-Foreman is currently selling at $86.31, up $2.96  (3.55 percent) on the day. The stock is up 28 percent against the year-ago price

Brown-Foreman, a Louisville, Kentucky firm, also markets Southern Comfort, a liqueur made from its Tennessee whiskey, a popular Vodka called Finlandia, the el Jimador brand of tequila products, Canadian Mist, a liqueur made from Canadian Rye Whiskey, and the Korbel Champagne brand. Of these, Finlandia posted a seven percent gain the third quarter. The Korbel brand bubbled up by three percent, but el Jimador and Southern Comfort each gave back five percent. Canadian Mist lost one percent.

Jack Daniel’s may be made from sour mash, a concoction of 80 percent #1 yellow corn, 8 percent rye, and 12 percent malted barley yeast, enzymes and water, but it isn’t Tennessee sipping whiskey until after the sour mash has been filtered, distilled and aged in the cask for an unspecified number of years. (It also cannot be called Bourbon because Bourbon cannot be more than 79 percent corn.)  As with Scotch whiskey, much of the flavor in the final product stems from the casks in which it was stored but, with Scotch, additional flavors are added by types of fuel used to distill the beverage with different woods and peat mosses each contributing a distinctive flavor. Tennessee Sour Mash depends on the quality of the raw ingredients and the skill invested in the process, but the flavor is in the casks.  

Unlike Scotch whiskeys, which are priced according to the amount of time the whiskey spent in the barrel, Jack Daniel’s tests each barrel individually and bottles the contents of the barrels when they taste right to the master distiller, of which there have been only seven since the company was first founded in 1875. The company markets a wide array of specialty products drawn from specific barrels, or resulting from special processing techniques. Many of these bottles go unopened because of their collectible value, which has contributed to the increased sales of the company’s products.

In fact, the Jack Daniel’s barrels themselves have something of a cult following all their own. Collectors are purchasing retired  barrels for up to $400 apiece for decorations. Drinkers can get one filled to the brim from Sam’s Club for $10,000. Die-hard Jack Daniels drinkers can drive down to Lynchburg, Tennessee and select their own barrel right off the racks in comparative taste tests. The staff will even put it up in bottles or help customers load the barrels onto their trucks. Barbecue chefs might also be interested in a bag of wood chips, purportedly made from retired barrels and still infused with the remnants of the whiskey. The T.G.I.F. chain (Friday’s) has a marketing partnership with whiskey maker and features a menu with several dishes infused with Jack Daniel’s products, including a line of barbecue sauces that use the whiskey as a main ingredient. (Veteran barbecue chefs know better; they simply marinade their meat directly in the whiskey.)

The company mass markets four different products, including Gentleman Jack, Original Recipe Tennessee Honey, Old Number 7 and Jack Daniel’s single barrel, but also sells 34 specialty versions in the bottle, including one dedicated to Frank Sinatra. Really adventurous drinkers can even get un-aged Tennessee Rye whiskey – what moonshiners used to call White Lightning – which is as clear as water and come, of course, it a clear glass bottle. It ain’t bourbon, but it will knock your socks off a lot faster than bourbon will.

Sooner or later, everyone asked the question, “What does the ‘Old Number 7’ on the  label really mean?”

Well, there are two stories about that. One story was that, in a taste testing competition, the young Jack Daniel’s was assigned number seven, with the numbers being assigned to keep the competition fair. When he won the competition, he adopted “Old Number 7 as a good luck charm. The other story was that, during the bad old days of Prohibition, one of the shipments from batch number 7 was hijacked and, since it was a particularly pleasant tasting batch, customers wanted more of it. The distillery created the ‘Old Number 7’ label to distinguish the original batch from the following batches made to make up the difference. The problem with that story is that there has never been a “New Number 7.” The company’s  employees themselves say they really don’t know what it means, and that no one else does either.

Jack Daniel’s occupies a unique niche in the American spirit market. No other American made-liquor has ever achieved the same cachet as the quintessential American whiskey. There are other American whiskies, some of them quite good, but Jack is the only one that patrons can order by its first name anywhere in the world and get what they asked for….unless they happen to be in Lynchburg, Tennessee, where the distillery is located. Lynchburg is in Moore Country, Tennessee, which is a dry county. You can’t drink Jack’s  in the whiskey’s home town.

So, Jack’s spikes to parent company Brown-Foreman’s quarterly profits will continue for a long time. The best-known American whiskey is in a class by itself.

By Alan M. Milner

Sources:
Jack Daniel’s
ABC News
Louisville Business First

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